Other people's business

RSS

The mining industry is about to fall into a very deep hole

But there could be light at the end of the tunnel.

New Statesman
Photograph: Getty Images

The mining industry finds itself in a very deep hole after new data from China.

China’s May figures show a dawdling second quarter in the world’s second largest economy. The effect was imminent on the Indian Rupee and the Australian dollar, but the biggest blow was delivered at mining companies, which fell 0.7 per cent. Commodity prices crippled from Australia to South Africa and Standard & Poor’s GSCI gauge of 24 raw materials dropped 0.5 per cent.

This whirlwind of data has sent tremors through mining companies everywhere, from board room to base camp. But why should this matter here in Britain, where mining is something more nostalgic than material?

The irony is that as Britain has lost all its mines, it has gained more mining companies. London has become the commodity centre of the world through the London Metal Exchange and, as a result, has some of the world’s largest mining companies: Anglo American, Glencore Xstrata and Rio Tinto are all listed here.

Aside from China’s depressing figures, it has not been a good spring for London’s listed miners. ENRC, the London listed Kazakh mining group is under investigation by the Serious Fraud Office for multiple counts of corruption while Bumi, already a boardroom battle ground, announced last week that it has “lost” $201m. Following these allegations, there are calls for the FSA to keep a closer eye on these UK-listed mining companies – that means more regulation.

But perhaps it is not all doom and gloom for London miners. Like with the banking industry, forced competition on the one hand and tighter regulation on the other might see a turnaround in an industry mired in controversy.